Your best new year resolution could make you rich

Your best new year resolution could make you rich

Your best new year resolution could make you rich with these money-saving tips.

Struggling to get out of debt? Follow this advice to take control of your finances and make 2016 your most prosperous year yet.

Your-best-new-year-resolution-could-make-you-rich‘Too many South Africans live on credit, spending more than they earn. Unfortunately this lifestyle is unsustainable, sooner or later this habit catches up with us and it becomes incredibly difficult to correct. Why not start the New Year off with a new mind-set and a rule of thumb: don’t spend money you don’t have,’ says Sugendhree Reddy, head of personal Banking at Standard Bank.

To make managing your money wisely your number 1 New Year’s resolution, Sugendhree has this advice…

Make 2016 prosperous

Resolve to make 2016 a year of financial prosperity by understanding and tackling your spending habits.

Budgeting will help you in knowing your financial status, as you can work out how much you are left with after all the fixed monthly instalments are paid. It is important to prioritise the expenses while drawing up your budget as well as:

  • Sticking to the budget once it has been drawn up. This will help control your spend.
  • Deciding on how much money you can afford to put away in a savings account every month to cover unexpected events. Savings are important as they help with unexpected financial emergencies or other things you love to do.
  • Allocating a percentage of your income that you can afford to spend on paying off loans to decrease the amount owed.

Paying debt off

Begin the New Year with a mission to free yourself from debt. Pay off all your accounts and cards and enjoy a year in which there is money left at the end of the month, rather than the traditional ‘too much month left at the end of your money.’

In paying off your debt, focus on reducing the largest amounts first. This saves the greatest amount of interest which, again, can be used to pay off other, smaller debts.

Debts should be paid off according to the interest rates that are payable on them. It is best to pay off short-term debt first, as these attract higher interest rates.

It helps to:

  • Make a list of all your debts.
  • Identify those with the smallest balances and highest interest rate.
  • Put together a plan to pay the debt with the highest interest rate first.
  • In the case of store cards, continue to pay the minimum amount due and where you can pay a little extra, do so. This will ensure your good credit profile is unaffected.

Managing your credit rating

Using credit wisely can work to your advantage – if you are dedicated to paying your accounts on time. Every organisation that lends you money, or has a financial arrangement with you, will check your credit history before they extend the loan or service. If you pay your bills on time, you will have a good credit score and it should be easier for you to secure a loan. However, if you miss payments, or pay your bills late, your score may look a little bleak, and the bank will be more reluctant to lend you the money you need. Make 2016 the year dedicated to understanding your credit score. It is a convenient way of tracking your credit health and whether it is improving.

Seek expert advice

Having a plan in place and making the right choices in life is important, especially when it comes to money matters that could impact on your life and the future of your family for years to come. It is important to remember that you do not have to do this alone.

The beginning of the year is an ideal time to seek the advice of a financial consultant who can assist you with planning your future. He or she will have the financial education, financial research tools and industry know-how to ensure that the various stages of your life are considered and financially catered for. They will also be able to identify short-, medium- and long-term investments.

Ultimately, the aim of a good financial planner is to ensure that you can meet planned financial challenges and eventually retire without having to sacrifice the standard of living you may have worked for years to achieve. It is important to realise that successful planning means regular meetings to discuss changing personal needs and market influences.

It is also advisable to seek expert advice and help should you find yourself in the debt trap. Far too many consumers think that by ignoring bank correspondence over non-payment, or skipping payments will make the problem go away. It helps to talk to the organisations involved before it’s too late, as defaulting could result in legal action and a solution can always be made.

Don’t incur more debt

It is tempting to borrow again, especially to pay off your debts. Debt isn’t always a bad thing. Without it most families could not afford to buy a house or a car. The thing to remember about debt, though, is that it’s extremely expensive.  What must be considered is what the debt is for and what it can add to your life.

‘If you find yourself in a position of spiralling debt, visit your bank,’ says Ms Reddy. ‘Be honest about your financial position and there may well be a solution to help you.’

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